SACU and the Political Economy of Regionalism: Towards Deeper and Broader Integration?

The document analyses the transition of the Southern African Customs Union (SACU) from a model of South African dominance and protectionism to one of 'open regionalism' and consensus-based decision-making under the 2002 agreement. Using game theory to explain the difficulties of regional cooperation, it argues that SACU's historical durability relied on a tradeoff where smaller members accepted South African policy dominance in exchange for generous shares of a common revenue pool. The 2002 agreement threatens this balance by seeking to reduce external tariffs, which would likely shrink the revenue pool, while granting smaller members veto rights over such reductions. The author suggests that for SACU to succeed in deepening integration or expanding membership to countries like Mozambique, Malawi, Zambia, or Zimbabwe, it must find new ways to align the strategic self-interests of member governments with collective developmental goals.

• SACU's historical durability was based on a pragmatic model combining South African decision-making dominance and a protectionist external tariff, which provided financial compensation to smaller members through a common revenue pool.
• The 2002 SACU agreement introduces a fundamental shift toward 'open regionalism' and consensus-based governance, requiring member governments to agree on substantive matters and the admission of new members.
• The 2002 agreement creates a strategic conflict: reducing external tariffs to integrate into the global economy will likely shrink the revenue pool that smaller members depend on, yet those same members now possess veto rights over tariff reductions.
• Game-theoretic analysis, specifically the 'prisoners' dilemma', suggests that mutual economic gains alone are insufficient to ensure regional cooperation because individual governments may prefer to 'free ride' or retain policy discretion.
• Expanding SACU membership to include Mozambique, Malawi, Zambia, or Zimbabwe would complicate existing challenges, potentially leading current members (BLNS) to oppose expansion unless South Africa increases the development fund.
• To sustain cooperation under the new framework, SACU may need to replace direct revenue transfers with new forms of compensation, such as development funds based on per capita income, external aid from partners, or regional infrastructure projects.

APA

Alence, R. (2006). SACU and the Political Economy of Regionalism: Towards Deeper and Broader Integration? South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2008/11/Briefing-No_12_Alence_Final.pdf

Chicago

Alence, Rod. SACU and the Political Economy of Regionalism: Towards Deeper and Broader Integration? South African Institute of International Affairs, 2006. https://saiia.org.za/wp-content/uploads/2008/11/Briefing-No_12_Alence_Final.pdf.

Wikipedia

{{cite report |last1=Alence |first1=Rod |title=SACU and the Political Economy of Regionalism: Towards Deeper and Broader Integration? |publisher=South African Institute of International Affairs |date=12 June 2006 |url=https://saiia.org.za/wp-content/uploads/2008/11/Briefing-No_12_Alence_Final.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{alence2006sacu, author = {Alence, Rod}, title = {{SACU and the Political Economy of Regionalism: Towards Deeper and Broader Integration?}}, institution = {South African Institute of International Affairs}, year = {2006}, month = jun, url = {https://saiia.org.za/wp-content/uploads/2008/11/Briefing-No_12_Alence_Final.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }